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Schwab Earnings Preview: The Quiet Giant Will Benefit From A Bull Market

Brian Gilmartin, CFA profile picture
Brian Gilmartin, CFA


  • Over time, Schwab should be able to return more capital to shareholders.
  • "Chuck" is the low-cost discount broker leading the way with lower commissions.
  • The "money-market fee waiver" benefit has now dissipated as fed funds rise.
  • Schwab could start returning excess capital to shareholders.
  • Schwab is still mildly diluting shareholders - I wish they'd stop doing that.

Charles Schwab (NYSE:SCHW) is the market share and cost leader in the old "discount broker" market. I think that sector title has lost its cachet - Schwab, Ameritrade (AMTD), Interactive Brokers, etc. have now become more "asset gatherers" and individual-investor enablers for a full panoply of investment management and investment planning services. The EF Hutton's, Merrill Lynch's and Smith Barney's of the 1970s to 1990s have now morphed into the Schwabs and TD Ameritrades of the millennial generation.

Briefing.com couldn't confirm the earnings date and for some reason Schwab is always somewhat suspect about their date, but Briefing.com does expect Schwab to report their Q2 '17 financial results on July 18th, 2017.

Analyst consensus per Thomson Reuters I/B/E/S is expecting $0.39 in earnings per share on $2.1 billion in revenue for expected year-over-year growth of 30% and 16% respectively - not too shabby if you ask me.

A Quick Look at the Numbers:

Q2 '17 est Q1 '17 Q4 '16 Q3 '16
2019 EPS est $2.20 $2.26 $2.30 $1.95
2018 EPS est $1.95 $1.95 $1.99 $1.72
2017 EPS est $1.63 $1.62 $1.63 $1.52
2019 EPS est gro rt 13% 16% 16% 13%
2018 EPS est gro rt 20% 20% 22% 13%
2017 EPS est gro rt 24% 24% 24% 19%
2019 P.E 19(x) 17(x) 18(x) 16(x)
2018 P.E 22(x) 19(x) 21(x) 19(x)
2017 P.E 26(x) 23(x) 25(x) 21(x)
2019 rev est (bl's's $'s) $10.7 $10.9 $10.9 $9.7
2018 rev est $9.7 $9.7 $9.7 $9.1
2017 rev est $8.7 $8.6 $8.6 $8.3
2019 est rev gro rt 10% 13% 11% 7%
2018 est rev gro rt 12% 13% 13% 10%
2017 est rev gro rt 16% 15% 15% 12%

Source: Internal spreadsheet with Thomson Reuters I/B/E/S estimates as of July 14th, 2017

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This article was written by

Brian Gilmartin, CFA profile picture
Brian Gilmartin, is a portfolio manager at Trinity Asset Management, a firm he founded in May, 1995, catering to individual investors and institutions that werent getting the attention and service deserved, from larger firms. Brian started in the business as a fixed-income / credit analyst, with a Chicago broker-dealer, and then worked at Stein Roe & Farnham in Chicago, from 1992 - 1995, before striking out on his own and managing equity and balanced accounts for clients. Brian has a BSBA (Finance) from Xavier University, Cincinnati, Ohio, (1982) and an MBA (Finance) from Loyola University, Chicago, January, 1985. The CFA was awarded in 1994. Brian has been fortunate enough to write for the TheStreet.com from 2000 to 2012, and then the WallStreet AllStars from August 2011, to Spring, 2012. Brian also wrote for Minyanville.com, and has been quoted in numerous publications including the Wall Street Journal.

Analyst’s Disclosure: I am/we are long SCHW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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